House Committee Votes to Repeal CFPB Auto Lending Guidance
WASHINGTON, D.C. — A bill supporters believe will bring more transparency into the Consumer Financial Protection Bureau’s guidance-making process was passed by the House Financial Services Committee on Tuesday.
The bill, H.R. 4811, adds safeguards such as requiring prior public notice and greater transparency of future CFPB guidance. In addition, the bill would rescind a bulletin the bureau issued in March 2013. It stated that auto finance sources would be held responsible for discriminatory pricing resulting from policies that permit dealers to mark up interest rates as compensation for services rendered. The CFPB would be allowed to reissue the guidance, but with transparency and public review.
The Guidance Transparency Act bill passed the committee on a bipartisan 35-to-24 vote, with Democrats Joyce Beatty (Ohio), Steven Horsford (Nev.) and David Scott (Ga.) supporting the bill. It now heads to the full House of Representatives for a vote.
The bill will now be voted on by the full House of Representatives.
Associations such as the National Automobile Dealers Association (NADA) have been vocal in support of the bill. On June 10, the NADA and the Alliance of Automobile Manufacturers, the American International Automobile Dealers Association (AIADA), American Financial Services Association (AFSA), Recreation Vehicle Industry Association (RVIA), and the Recreation Vehicle Dealers Association (RVDA) sent a letter to the committee in support of the bill.
“The auto finance guidance pressures indirect auto finance companies (lenders who finance auto loans originated by dealers) to eliminate the ability of dealerships to discount the interest rates offered to customers who finance their auto purchase,” the letter read, in part. “The bureau embarked on this new policy, by its own subsequent admission to Congress, without first studying what impact these policy changes would have on the auto finance market, or the marginally creditworthy.”
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